UP546 NBA Europe: It’s not about basketball

The NBA Europe franchise sale process has moved from speculation to live transaction. Franchise fees of $500m to $1bn. No broadcast deal. Governance terms that European investors have already pushed back on. And a city map — London, Paris, Madrid, Rome — that looks more like a premium real estate index than a list of places where people actually watch basketball.

Lenz Balan is right in the middle of it. He's the CEO of the London Lions, the club he helped save from administration after the collapse of 777 Partners, his former employer. He's seeking to build a new arena. He's positioning the Lions for NBA Europe and EuroLeague. And he's one of the few people who can speak to both the investment case and the on-the-ground reality of trying to grow basketball in a city that keeps saying it's ready.

This conversation covers the money — what kind of capital actually makes sense for a multi-decade project with unresolved economics. The fan map problem — whether London is genuinely a basketball market or a hospitality venue dressed up as one. And the questions that still don't have answers: media rights, player movement, the EuroLeague endgame.

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Transcript

Speaker 3 0:00

Hi. Yeah, it's Richard Gilis here. Welcome to Unofficial Partner, the Sports Business Podcast. Have you got between 500 million and a billion dollars hanging around? If so, I might have a basketball franchise to sell you if you don't. Also, hold on. The next 45 minutes or so is a conversation you need to hear.'cause I think it's about how the money markets and the American sports and entertainment industry views Europe. Our guest today is Len Ballen, who is Chief Executive Officer of the London Lions basketball team, and he's right in the middle of this process. He's got an interesting background. I first met him when he was at 7 7 7 Partnership and when they acquired the London Lions and the British Basketball League, that subsequently collapsed in 2024, and the lions briefly entered administration. The BBL was dissolved and stayed on through the crisis and secured ownership via Tessa net. So what's actually happening? What sort of money is best suited to buy an NBA franchise? And what does this tell us about the sport and entertainment market in 2026? It's a fascinating conversation. Really honest and open, and I really liked it. you end up with loads of more questions than you start, which is probably a good way of judging a decent podcast. Cue the music.

Richard Gillis, Unofficial Partner 1:27

I'm trying to think when the last time we spoke. I think it was three or four years ago.

Lenz Balan 1:34

I think it was the first time when we had invested in, in the Lions. So yeah, maybe, maybe five years ago now. It was a long time ago.

Richard Gillis, Unofficial Partner 1:41

Yeah. Yeah. And you were at 7, 7, 7 at that point, as I remember.

Lenz Balan 1:46

yeah. Yeah, I was an investment professional there.

Richard Gillis, Unofficial Partner 1:48

And. You are still in London basketball.

Lenz Balan 1:52

I know maybe

Richard Gillis, Unofficial Partner 1:53

that, how does that work?

Lenz Balan 1:54

I, well, my my dad thinks I'm crazy. Because he, because he is like, do they even play basketball in, in the uk? The, you know, the long story short is obviously I fell out with, with my old firm for a number of different reasons and really fell in love with the club. I wanted to rescue the club and went about trying to find investors to take it over and then was able to, to figure that out ultimately and left the firm. And they so they, the tes net guys took it over. And they sort of said, you know, we're not gonna do this without you sticking around. Would you like to stay on as president, CEO of the club? Thought about it for a while, said yes, and, and they've been rebuilding the club since.

Richard Gillis, Unofficial Partner 2:34

And now you're in Notting Hill.

Lenz Balan 2:35

And now, now I'm in noting hill in a tiny flat, but I love this place. It's great.

Richard Gillis, Unofficial Partner 2:41

So everywhere I go at the moment, I people almost the first or second conversation is NBA Europe. And I think that probably says something about the rooms I'm in or the people I meet. But we are at that moment where there's a lot of people saying, you know what if, what's gonna happen? What's, what's the plan? Blah, blah, blah. So I thought it'd be great to get you on'cause you're right in the middle of this and. I think there's a few questions specific about the, project, but also what it means. What do you think it represents? Do you know what I mean? There's a, there's sometimes these big deals are poster children for something else. Just a, a framing of what we think sport is these days and what the sport and entertainment market is. So I guess there's a, my question is. I think ultimately what this podcast is about is what type of money do you think is best suited to running or financing an NBA Europe franchise?

Lenz Balan 3:44

It's a really good question. What kind of money is suited to running and financing an NBA or a franchise? My, my. You know, I would think you need long term, long dated capital. So there's gonna be a lot of people who are gonna be interested in the sort of core parts around this. You've had all these private equity firms that have raised money around venue. Venue growth around the sort of resilience of IP at the league level, media rights, et cetera. So that part is going to be I think the sort of easy part of the caps stack to kind of fill out the more difficult part is. Can you get an investment vehicle that is, that, that has a very, very long term perspective. So my guess is family offices, like our family office tenet who aren't sort of traditional private equity firms. But make long-term investments, long-term bets potentially insurance backed long sort of investment firms or investment vehicles, and then sovereign wealth funds. I think those are probably the three. The three kind of groups of people that make sense from an investment standpoint on the pure club risk. And then they'll obviously partner with there'll be lots of capital that'll be available on the infrastructure piece and the potential IP piece. I think that's kind of where it, it splits up.

Richard Gillis, Unofficial Partner 5:00

So let's start with the obvious. Let's talk about London, but we'll just use that as a proxy.'cause I think there are two maps as far as I can see. There's the map of Europe as the money. Would like

Lenz Balan 5:09

Yeah.

Richard Gillis, Unofficial Partner 5:10

that. That's what the league they dream of. London, Paris, Rome, Madrid. There is also another map, which is where the fans are proper basketball fans and that isn't in those cities largely, but the, you know, there's a lot, as you will know very well, it's Southeast Europe, it's Turkey, it's Croatia, those are proper basketball fans. You know, they are just, that's a sort of rivalry, club rivalry in those markets that rivals European football rivalry. You know, there's an edge to it. There's a, it's, it's proper sport. And those are two maps that, okay, there's a bit of a but convince me why there is a market for the money map. What is it that they're seeing? They're saying, okay, is basketball actually central to this or is this just about real estate? It's about sport and entertainment marketplaces. It's a sort of different version of sport than a sports fan would recognize.

Lenz Balan 6:15

So I think we talked about this maybe a while back, Richard. To me, basketball, at least in this country in a lot of ways reminds me of football or I grew up calling soccer, whatever it was, 20, 30 years ago. So I can say in the Uni United Kingdom, there was sort of this high watermark in the nineties that everybody sort of talks about where people really enthusiastic about it, but there wasn't like the right sort of economic moat behind it. In other words, you had clubs that. Never really owned or controlled their facilities, which meant that there wasn't there wasn't the same kind of backing that you might've gotten in these other countries that largely got facilities from governments, long-term leases from governance that made that made their venues work. A good example is our sister club's Aris, they were able to build their 20,000 seater arena. That 20,000 seat arena that they successfully built became the economic backbone to building a very successful and, and, and a profitable club. And one that's that's doing quite well in the, in the actual competition. So I think historically that, that sort of divergence in the nineties was kind of a big chunk of, what happened historically. And I also sort of think, and, and, but what is left? And going back to the, the point about America is you still have a. Massive cultural influence in the u the UK that speaks well to sort of basketball and basketball audiences. Basketball benefits from being a very low barrier to entry sport in every way you can imagine. It works really well for the way in which we consume content. You don't have to really understand and grow up and to appreciate the athleticism and, and the plays. It has these connections to fashion, culture, art, all of those positive things. And you've got. Basically a, despite all of the really, really difficult, and it's really interesting to hear the stories of some of the British players on our team, whether it's Dean Williams or Molo o Soko, other players, what they had to do. To become professional basketball players because of all the barriers that exist, primarily because there were no, there were no sort of sustainable clubs that had the infrastructure needed for it to be, to be, to be consistent. That reminds me of soccer in the US 20 years ago. Big participation base, lots of people who wanna play. And so I think it's more about untapping. Those sort of markets more than, more than anything else. I do think that there, I think people look at it and they say there's potential, but it's a customer acquisition strategy, really. And that customer acquisition strategy is buoyed by the sort of underlying fundamentals about the interest in the sport and about its accessibility to basically anybody. It's very hard for me to get a British person to be excited about baseball. I grew up in Boston. I love baseball. I love my Red Sox. It's very difficult. I went to a cricket game. It was fun. I was sitting next to, I forgot a famous cricketer. I had no idea who he was, but he was really sweet to me and he, and he explained to me the game and and all of that. But it was really difficult for me to process and understanding, understand how. Incredible, the athletes there. Basketball doesn't have that. And I think in the UK in particular, what we try to do with Alliance is try to infuse it with a really entertaining night out. And then over time, and, and I think it is for, for, for folks, for lots of folks. And then over time you start to build fandom from there. It is a, a customer acquisition sort of strategy, and I think the potential is massive. It's just about having the right operators who kind of understand and view this as a as almost like a venture kind of startup in a way to acquire customers. And you can do it through compelling content. And that compelling content is candidly easy for people to digest.

Richard Gillis, Unofficial Partner 9:42

That might be the difference between sport and entertainment. That line, isn't it? You know, when you, you, you are sitting next to the cricket guy or I'm sitting next to a baseball guy. I sort of, I'm there as a tourist. You are there as a a fan, you know, a proper fan. And I think that I don't care. I go to a lot of events where I actually fundamentally don't care. I'm there because it's a nice day out and it's, you know, I'm a big inventor, which is the term that sort of grew, I think, around the London 2012 Olympic, that suddenly became the, the, framing of who the audience, the target audience was. And I care about relatively few things as a sports fan. You know, I've got a football club. It might be about it actually. There's a few other sort of bits and bobs that I sort of take an interest in and I'm serviced with all the, all of the media, but I don't, it's gonna be hard to sort of move me from someone who might turn up every now and then and watch a basketball match in London to someone who is a fan, and I'm wondering if that actually matters that

Lenz Balan 10:46

Well, I think that the first step toward be a fan is experience it as in, in entertainment. And again, I think. The ability basketball is an incredibly complex strategic game. But I think the nice part I don't, I think it's just as strategic and complex as football or rugby or cricket or any other sport, right? At a high level if done sort of properly. But the nice thing about basketball is. You can still process and enjoy it without understanding and understanding that bits. And so the first part is hook people in, right? So you hook people in with the entertainment and it's not that hard to do it because of the nature of the sport. It's fast paced. Athletic movements usually result in some sort of really exciting play. And then all of the entertainment around it keeps your engagement during timeouts and, and other sort of periods. So I think it's always about first entertain you. That was, you know what, that was a good bit of fun. I really enjoyed it. I kind of understand a little bit about it now and then you go to game two and game three and all of a sudden you're a fan. It happened with me with football here in the uk. A friend of mine took me to a full on game and sort of, oh, that was cool that I enjoyed that

Richard Gillis, Unofficial Partner 11:59

And yet you became a football fan.

Lenz Balan 12:00

and, and now I watch football. And I think, I think that that's, that is the opportunity. I also think that there's. A, a, a large segment of the population where they do look at sport as entertainment. If I think about my mother for example she loved Michael Jordan and the Bulls probably'cause she thought Michael was attractive. But that led her in to actually becoming a basketball and a sports fan in a way. So I do think. Basketball sort of lends itself in a, in a very unique way. I think maybe football is the only sport that's similar to that where you can, because of the, the, the low barrier to sort of entry and understand converting people into fandom, I don't think is, is, is as difficult. The, the question is, is, is whether or not there's enough sort of clubs with the right kind of ownership groups. And interest level to spend the money on the marketing that you need to sort of capture that fan base and take them down that capture that audience base and take'em down that, that sort of funnel. And I think there is because of the basic playing base and, and, and because of some of the things we talked about earlier.

Richard Gillis, Unofficial Partner 13:05

So the football IP in this conversation is interesting. So again. And put me right on this, you know, please, if I'm got the numbers wrong. So there a franchise. If I wanna buy a franchise, an NBA franchise in a, a major European capital, it's gonna be about 500 million to 750 million. Is that about right?

Lenz Balan 13:28

Yeah, it's 500 million to a billion is what they're, what they're saying for NBA Europe. Yeah.

Richard Gillis, Unofficial Partner 13:32

Okay. And a shortcut to the fan question is going via football ip. So the fandom that's been built over a century by Rio Madrid or by, you know, more recently by PSG in Paris. That is a way of potentially, I could see a sort of. A PowerPoint deck which gathers together football fans, merges them into PSGs or R Madrid's basketball potential audience. I can start to see that as a, as a thing. And Okay. I, that's an argument I'll either agree with or not. I'll not, or I buy or not, but that's the shortcut as I understand it. And the question I've got is actually from the club's perspective. What role are they playing, because I'm assuming they're not gonna be coughing money for the right to access their own audience. So just walk me through how that works in those cities.

Lenz Balan 14:31

Well, I think most people who are buying into sort of NBA Europe or trying to build a Euro League franchise or trying to build a top franchise are have an investment thesis that they're saying. The market is underserved by this sport, and we believe that we can capture and grow that audience by this sport. The football question is a really interesting one. To me, I'm not a hundred percent convinced at least in the UK market, that the football. Question answers it. I could be wrong about it. You know, I think there's, one of the things that you learn sort of living here is how sort of tribal and how prideful football fans are. So I don't see an arsenal basketball club.

Richard Gillis, Unofficial Partner 15:09

could pick the wrong club,

Lenz Balan 15:10

You could pick the wrong club, You can immediately alienate sort of other potential fan bases. So I think there is a potential, there's, there's trickiness there. The other question I have is whether or not those audience overlap in a meaningful way. So there'll be some portion of people. Will be really, really just interested in sport. People like myself, I just love sport, so I'll go to, I'll go to anything and yeah, I loved going to the cricket match even though I didn't understand what was happening. You know, and and I think you'll get some of that. I'm not sure if that audience necessarily, I would say in this market is necessarily. There's enough of an overlap, so I do think that you'll pull from some of that audience. But really growing basketball is about pulling from the large participation base that already exists and getting them to be a part of a club infrastructure and then pulling from the sort of new audiences that are interested in it initially for the entertainment aspect. And for. The ability for them to process and enjoy the game relatively, relatively quickly. So, you know, I'm not convinced that in every single market it works the exact same way. I exact same way, way in terms of being able to, to leverage that. Where I do think that there's possible synergies there is, you might have a large sort of commercial operating, ecosystem that you can lean on that can help you sort of build out and grow that audience. And you can, there's some, some things that are shared. I can say from a London Lions perspective being basketball focused is really important because trying to build basketball in a country that has a large participation base but doesn't have a sort of. History of like really building it up is very difficult. The barriers are everywhere that you can imagine in places that people probably will be surprised by if they sort of landed here sort of tomorrow and try to figure out how to do it. So I do think that there are also advantages of being a basketball and sort of organic basketball club trying to build an organic basketball fan base. And I think. That argument is just as compelling as trying to borrow the football audience, which may work. You know, I'm not saying it doesn't, but I, but I, but I do think that there are things that people aren't necessarily factoring in from that perspective. The other thing that's really important that I've learned as an American living abroad and spending time in Europe. UK is different from a lot of European countries. And so that may work in countries where historically it may, it may work better in countries where sort of historically you know, it's been a club infrastructure, so in Spain and some of these other countries, you join Royal Madrid as a club and you play all kinds of sports and you're a part of the Royal Madrid Club. Here in the uk the ecosystem hasn't really developed that way. There is a history of football clubs that have owned basketball clubs, but you know, it seems to me that the sports are quite separate. You don't join. You know, you don't join Chelsea to play a bunch of sports. You join Chelsea to play football and that's it. You join your cricket club to play your cricket club, and that's it. Rugby club, to play your rugby club, and that's it. And so I do think that there are, there are ways in which that may be easier in say, Paris where things are a little bit more, you, you know, a little bit more club based across sport or Spain than it may be in the uk. So there are really important distinctions and differences depending on which economy you're in.

Richard Gillis, Unofficial Partner 18:25

And how many franchisees will, will. London or the uk. Sustained. Do you think, I mean, do you think it will be one in London and one in Manchester, or do you think there's, you've said that, that it could take two in London, but how, what's the, what's your running theory?

Lenz Balan 18:44

So. You know, the, the good news is I think, I think the SLB, which is the domestically that the London lines are playing in had benefited from some enormous tailwinds. I think the interest in, in from Feba, the interest from Euro League, the interest from NBA are all positive tailwinds in general, but. Probably the most important tailwinds is an influx of, you know, sort of owners with the sort of capital and the context to do this and with the ambition to sort of build big clubs. So you, you, you've got Manchester, Sheffield Bristol, you know, you've got the majority of clubs are now investor backed. Bristol's trying to build a large arena in Bristol. You've got Manchester trying to play in the sort of champions league, so there's a lot of really positive things that are happening from my perspective. It is really, really important for us to grow the domestic league and domestic audience. And we do that by continuing to have investor backed folks like Sheffield and Manchester and others coming into markets that I think are really, really exciting markets for basketball within the uk. And that quality and that level really, really has to be at a high level if they are to compete with a perspective NBA franchise. And our league needs to be able to digest clubs. Easily that want to play at the Euro League or NBA Europe or Champions League level. However, all of that sort of works out. So I think that's really important. So my goal, my hope is that we can expand our franchises off the back of all of that tailwind. And I think it's a really interesting opportunity for investors who may not wanna pay a massive investment for a Manchester, a London franchise. But wanna benefit from those tailwinds. I would be looking to put a club in Brighton and Birmingham and all these other places if I was an investor, because that's a secondary way of, of, of sort of capturing that value. So I think that part is really important in terms of London itself. I mean, London has seven Premier League football clubs. It might be six soon, but, but it's, it looks like it's got se it's got seven Premier League football clubs. So I do think that there's room in London for multiple top level teams. I think it's really important from London in particular to be, have all of their clubs aiming to play at, top level European competition in order for it all to be viable. And I think that marketplace is so large. It's not a demand problem, it's a supply problem. And you know, I would. I think that having several large clubs in a city like London would be beneficial to the Euro League and be a Europe project more, more broadly. And also would be, would be helpful to the clubs that actually exist. Now I have no control over what happens, who ends up being an NBA Europe if they come over and acquire us. If they start. They start separately. What I do have control of over is I've got great investment group. I've got really smart people trying to crack the market. We have a pretty good understanding of, and have a lot of learnings from things that worked and things that haven't worked. And as alliances we have. Global ambition. We wanna be a top team in Europe. We wanna be a globally recognized brand. We don't see why we couldn't be that. And no matter what happens the ambition is to make sure that the lions reach that goal. And we want to make, we wanna build a massive community of kids who I think are massively underserved because basketball has been underfunded and sort of poorly yeah, poorly funded sort of historically. And so I think actually having multiple clubs in London could be a, could be a really positive thing.

Richard Gillis, Unofficial Partner 22:00

So the, I mean the London market, there's the fan question, but there's also the corporate marketplace, which again, London, quite often people say London when it, when you look at it as a sort of sport and entertainment marketplace, it's a little bit like LA in that there's a, you know, it's, it. Packed with venues, it's got a, a thriving, it's a, you know, a major metropolis, but the entertainment marketplace and the corporate sponsorship marketplace is very mature. So if I'm an investor looking at coming in and building something in London or creating something in London, that's a huge plus point. And I'm wondering if. how much the basketball thing matters. I keep wondering whether, actually if I want to build a venue based, I wanna use basketball to get the mayor to cough for a venue, I'm gonna then come in and say, right, okay, this is a NBA franchise, but actually it's running day in, day out, an entertainment business, which. Could be, you know, anything. So from ABA voyage to concerts to whatever it is, which is just part of daily London life. And I can see the commercial appeal of that. And I'm just wondering how much basketball matter basket was, just the context for a. Just a different play. And we've seen in, in, you know, the money going into Athletic and Madrid, you are seeing it and it's, it's sort of, football is part of the conversation, but it's, it's just a sort of thing to keep the, the pot boiling. Actually, it's a real estate play.

Lenz Balan 23:36

I think you might have stolen one of my investment memorandums or our strategy. I, yeah, I think you're right. I think it is a, real estate is a really important piece of it, and that any asset that you have as a responsible sort of, as a responsible business, you're gonna try to sweat that asset and get the most out of it, and you have the benefit of it being London, like London, I think. Has an insatiable appetite for live events. And I, I'm not sure if we have enough indoor spaces to capture the potential of the London market just for a million different reasons because of its size because of its overall influence in the market, because of the diversity of its population you know, expats from all over the place. So there's a lot of really, really compelling reasons. Why sweating that asset makes sense, however.

Richard Gillis, Unofficial Partner 24:21

it, does it have to be a new venue? I mean, you've got the O2, you've got the co-op, sort of, live venue. What is it? Does it need to be a,

Lenz Balan 24:28

I don't think it needs, I don't know if it necessarily needs to be a brand, brand new venue, but I do think sort of needs to happen is that club is gonna need to have control over that venue in order to make the economic stack work that economics stack up. I think that's a really important part

Richard Gillis, Unofficial Partner 24:44

So the money, the investors will want to own the house. They'll, they

Lenz Balan 24:47

think so.

Richard Gillis, Unofficial Partner 24:48

rent, they don't wanna

Lenz Balan 24:49

Yeah, I think that's gonna, that's a massive, massive important part, at least from, from our perspective is that's really important. What I would say is the, however, is sport has a way, and, you know, you know, I'm always imagining I'm a bit of an optimist, but I think we imagine, you know, the potential of basketball being bigger and bigger and bigger over time. And based on sort of where the, the, the, the sort of powerful leagues with your league, NBA Europe, fiba. Based on their sort of interest, I think that will only accelerate it. And over time, the differentiator is that sporting asset. It does give you that cultural connection with the community in a way that like just a. Venue that is primarily that is only used for sort of, for music and entertainment, doesn't, it gives you a really powerful anchor tenant over time as you sort of acquire those customers and make them into fans. And it is a differentiated sort of selling point from a socioeconomic impact thing. The, the one thing about sort of the London lines and basketball that I really love that is sort of differentiated is you know, we are. Our success is a function of the impact that we make in the community. So if we can build positive community connections, give people belonging create a platform where the best, there's so many amazing basketball, potential basketball players. There's so many kids that I see in London. I walk, walk around, and. You look at him and you say, if he was born in New York, it'd be a completely different story, but here we just put him on a horse, which is sad for the horse as well as the, as well as the basketball player. So there's so much amazing potential in terms of creating elite athletes, creating sort of jobs and opportunities, but also creating more spaces for people to belong. And there's here in London and sort of across the country. And I think that sort of social impact is what I think. Political people, whether you're the mayor or or you're the Prime Minister, is, is sort of differentiated and new and really, really positive.

Richard Gillis, Unofficial Partner 26:50

I get, I mean, I am, I've always been a you know, and you won't know this, but you know, donkeys years ago because I grew up in London and. Basketball's had a go several times. As you know the history of this far better than I do. But as a London I was quite, you know, I played basketball at school, not to any great level, but I was, you know, it was sort of in the. School system. There was a local Brune Ducks was a name that you probably won't have come across in the past, but that was, that was the local team. Bruno University had a, you know, and they were in the National League. All of this is ancient history, but I remember talking to Heidi ov, so she was in charge of NBA Europe back in the sort of turn of the, you know, two thousands. And I, I bought it, you know, I got the, it's inner city, it's urban. it's got a footprint that, you know, good luck with the n trying to sell the NFL here, get a franchise here. Good luck with the MLB. Good luck with everything, you know. But basketball I, I think, has got a real chance and I've always thought that, and you are right, it's, I mean there was a great story in sort of East London last week about the sort of uproar of people closing, you know, the council. up a paddle court at 26 quid an hour, you know, versus an m in a basketball court. So I get it, and I, I can see the comms machine and I, I, you know, and there's a lot of it that I like. I just wonder if it comes back to, is it a 750 million quid, opportunity that, so there's two things going on. There's the basketball story, there's the money story, which I, I think, you know, that's the bit and. I look at the media rights marketplace. So what's the value of, of the European basketball media rights As of today, it's, what is it? 30

Lenz Balan 28:29

Yeah, I think that's probably right. Yeah. Something like

Richard Gillis, Unofficial Partner 28:31

So splitting that across, what, how many franchises are they going for?

Lenz Balan 28:36

Well, the, the NBA Europe's going for 16 franchises. We don't know the new talks with NBA Europe and Euro League is a little bit different.

Richard Gillis, Unofficial Partner 28:45

It's gotta go from 30 million divided 16 ways, which ain't gonna pay anyone's sort of, return on this in this type of 750 million quid investment unless it goes into, you know, the, another millennial. So that media rights number's gotta go up and go up very sharply and very in a, you know, in a very big way. What sort of number does it have to get to? To make sense at$750 million franchise investment.

Lenz Balan 29:15

Yeah. I mean, it's gonna, it's gonna have to get to a significant number. I think the interest level. I think that the NBA seems to have received from the investment community without the sort of media rights deal, being at the center of it at the moment is a function of the fact that the NBA is incredibly good at negotiating media rights deals. And I think the assumption

Richard Gillis, Unofficial Partner 29:37

In America.

Lenz Balan 29:38

in America that's correct, but I think there's like a couple of things that are unique here is the appetite for live sporting con. For live sports content in America is like, you know, it's, it is a voracious appetite for content. There's a voracious appetite for basketball content. That basketball content is can be differentiated. And if. If the NBA could prospectively sort of connect those two, which is bring the American audience into an amazing European product that is a sort of different level of economic opportunity. And I imagine that the interest level from investors is a function of the fact that the NBA has an incredible track record of driving those kind of deals up and that the American and that the US is a. It's a significant sort of market that is currently untapped in the us in, in, in Europe and the uk. So if you look at you know, the primary league, for example, there was, I'd never watch it. There would, all of a sudden I'd wake up in the morning and there's primary league football going on and I would watch it. And watching sport in the US you can't, you can't go to, you know, it's really interesting. I got pubs now because I live in London. Yeah. There's no, there's no games at the pubs. You go to any bar in Boston.

Richard Gillis, Unofficial Partner 30:52

That's an expensive pint. By the way, Notting Hill, if you go, if you go pubs in Notting Hill, I in Jeep.

Lenz Balan 30:58

But if you go to sort of any bar in Boston, any bar in the middle of whatever, there's a television and people are consuming, consuming consuming those games. So I think. The NBA is making a calculation that it can, that it can drive more commercial media rights to the league. I think Euro League, for example, there's a lot of room to grow in that, from that standpoint as well, even within the European market. And my hope is that, you know, somehow we're able to sort of, they're able to, the, the sort of the folks that are sort of making these decisions can sort of consolidate that basketball market into a simpler, simpler. Fewer competitions and then leverage the opportunity both in Europe to grow the market where I think there's still a lot of room to grow. And that's why the expansion markets that the NBA is talking about is really important but also potentially tapping into that US market as well.

Richard Gillis, Unofficial Partner 31:52

So it's got to get to about what, 500 million you would've said.

Lenz Balan 31:56

Yep.

Richard Gillis, Unofficial Partner 31:57

As a, as a sort of number that they will be targeting for the, for the media rights for this property. There's a, we had Mark Oliver on who you'll know as a sort of media, you know, one of the premium sort of media analysts. One of the points he made has sort of stayed with me, which is the, the stigma of a. Feeder league

Lenz Balan 32:16

Yeah.

Richard Gillis, Unofficial Partner 32:17

how NBA Europe can get beyond that and what that means for, there's both the playing star, you know, the, the, the players themselves who is gonna be appearing here and it feels like a sort of mirror image of the MLS or my, an Englishman's view of the MLS, which is a sort of retirement home for. for. you know, European footballers of a certain age, and I'm, I can, I can, you know, plus some promising youngsters who I've not heard of. Now, that's a package that can sustain only so far and, and certainly won't sustain a 500 million quid media rights market for very long. I wouldn't have thought, even with the NBA's brand attached to it.

Lenz Balan 32:57

I would. So I guess, I guess one of the things that I think is really interesting is I think most people massively underestimate. The quality of basketball players that are out there in the marketplace. Yeah, I, I, you know, if you were, you know, the way I think about it is just more football in general. If you're the 2000th best football in the mar football player in the world. You can make a million quid playing football somewhere in one of these top leagues. If you're the 2000 best basketball player in the world, you're a heck of a basketball player. You're probably not that different from the next level of basketball player going up. But opportunity, a limited number of clubs, et cetera, et cetera, means that you are now a coach at a local high school, or maybe you've turned into you know, whatever the profession may be. And so. From my perspective, I look at it differently. I just think basketball the, the commerciality of basketball hasn't, and the, the sort of potential of basketball hasn't, you know, hasn't been achieved. And if you look at Euro League basketball, these are in, these are not sort of second tier basketball players. These are exceptional basketball players. The Year League competition is an exceptional competition and it has the benefit of. Being unique from the NBA competition, not in a less attractive way. I was talking to a friend of mine, he's a football fan and he loves Syria football, loves it, loves it. And he just said it's just a different style of football from the prem, and he'll enjoy it in that way. And I think that's the, the opportunity in European basketball, which is to say. I think it'll create, there. There's lots of the, there's a, there's a supply, there's a massive supply dynamic of elite, exciting basketball players who need places to play. And who I think people will be really engaged with here in the us. I mean, Mike James is an incredible basketball player. He's just, and he's amazingly fun to watch. And he's here in Europe and he's here in Euro League. And I think if anybody goes out and watches the Euro League competitions, the Champions League competitions, or our Euro Cup competitions. You are seeing really, really, really high level of basketball that is different and differentiated from the NBA and I love the NBA and all that tells me is that there are more room, there's more room for different kinds of basketball and, and, and there's, there's more than an enough talent for it to not be perceived as a second tier product.'cause I don't think it is. I think it's, you know, I don't.

Richard Gillis, Unofficial Partner 35:23

I'm, I'm, I'm more than happy to take that. You know, I, I get it and I'm all for people earning more money and I get, but the people you gotta convince is Sky or be in sport or whoever is gonna have to underwrite a, a big check And it gets back to the maps because actually the media map is more London, Paris, Rome. Madrid, Germany than it is Eastern Europe and Turkey. I get your argument that this is good quality basketball, but they're not famous and they're not gonna sell tickets, they're not gonna sell subscriptions in London. So I think there's a, that bit is, I think a tricky. Dilemma'cause you've got this, I, I get it from a intellectual perspective, I just don't feel it. I think,

Lenz Balan 36:09

Yeah, I mean, I think you gotta spend some more time watching European basketball potentially. I think that the, the, you know, these basketball players are incredibly famous in

Richard Gillis, Unofficial Partner 36:17

I could do it, I could do that anyway. I mean, it is, you know, there's, there's Euro League going, it has been going on for a very long time. It's just not many people do,

Lenz Balan 36:24

I think that the, I think

Richard Gillis, Unofficial Partner 36:26

or they, they don't in the right place.

Lenz Balan 36:28

the, in the, in these markets. And I think that's the real opportunity here. And when we were looking at investing in sort of the UK market, we saw that across the board and that these other markets are just untapped and they happen to be the media markets. And that's the, that's the play that I think Adam and, and Mark C here. And that makes a lot of a, a lot of sense.

Richard Gillis, Unofficial Partner 36:48

How much do you think the marketing cost? So it's interesting. So let's, let's glass half full and say, right, okay. We're gonna, this is a, I can now see a mar, an NB, a marketing strategy backed by the N-B-A-N-B-A, coming to London, Paris, Rome, and it's gonna be enormous. It's glitzy and we are gonna be, okay. We're gonna take on the Premier League head to head. How much would that cost? Where does that cost reside? Is it a central marketing cost? Is it the MBA coughing for that, or is it. Individual franchisees, is it a mixture of both? Because it's gonna be, I dunno what the, the number would be, but it's gonna be astronomical. The media spend, they're gonna have to put behind that sort of push to, you know, over time to generate that sort of shift in interest to get that media rights number up. I mean, you're talking about hundreds and hundreds of millions.

Lenz Balan 37:35

Yeah, I think that's right. I do think that there is something amazing that exists today, which kind of helps, helps stabilize that a bit. And I think ultimately the value of any league IP is a function of. What the clubs are doing to build and grow their markets. And so it is gonna be a mixture of getting the right investors in place to sort of, to help sort of, buoy and grow clubs that are existing markets, but also in these new expansion markets like the UK and, and, and Paris and London and Manchester, what have you. It will require a significant amount of investment from, from those investment firms. Or from? From those, from those clubs,

Richard Gillis, Unofficial Partner 38:12

Yeah. Yeah. Okay. At the beginning I said, I asked the question you know, what form of money is best suited to financing an NBA Europe franchise? Your answer was there's a mixture of, we talked about patient capital. Adam Silver has said, right, this is gonna take a long time to make a return on this. You know, buckle up. So family offices. Insurance backed investment, which is interesting, which I, I, you know, I, that feels, I mean, again, your old house. 7, 7 7 was a sort of insurance backed private equity business, and sovereign wealth. The sovereign wealth question. I think if this was three years ago, people would be waving this through and saying, yeah, of course, put sovereign wealth on the deck. They will, you know, PIF will be coughing all over this and that ain't happening today. So what do you think has happened? Do you think they're just, this might be too late light.

Lenz Balan 39:10

I think it's very difficult for for me to make a I know there's shifts in terms of the way that sovereign wealth funds operate. But I do think that like basketball has a compelling case to make to any kind of investor, especially in these markets. And I have a feeling that Adam choose the folks who are focused on doing that can make that case in a really interesting way. The other bit is, you know, a lot of the sovereign wealth funds have expressed. Their sort of view. Through some of these investment firms as well. And so, a combination of a family office and the investment firms who are sovereign wealth sort of backed could end up being the solution. I think going forward. You know, I think for example, the lines are really great example. You've got we've got. Great market. We're building something that I think is really special. We have sort of subject market, subject matter expertise with our sister club, with, we've got expertise here in London having sort of operated the club for quite, for a little bit now. I, I know we would, we meet five years ago, something like that. So, and so you've got passionate people with sort of experience in terms of what it should look like and experience of, of, of operating it so that it, it sort of gets there and what the, understands like that local market ecosystem. And I think that is a good example of the kind of private investment firm. If I was a, you know, if I was appalling or Aries. I'd becoming us. Now I don't, I don't make those decisions. I wouldn't want to you know, I don't, I don't, I don't wanna pretend like, I could influence the process in any way. I can't. Right. There are a lot of really smart people working on, on figuring out the solution, but I think that's an example of an investment group. That that could be backed by sovereign wealth or some private equity structure that's more interested in the infrastructure piece to make that work. And there is no shortage of American family offices that would love to do things in basketball. It's just about creating and making the case for them.

Richard Gillis, Unofficial Partner 41:12

what do you think the lessons of, of private equity owning teams and leagues is? I mean, set you, you, again, I've referenced seven, seven, you worked there. That's, that's when we first met.

Lenz Balan 41:21

Yeah.

Richard Gillis, Unofficial Partner 41:21

You are not there anymore. I'm not, I don't wanna tie you with the brush of that com whole entire company, but I, you must have seen the fit between the money and the property and the sport. does that work as a model?'cause obviously that's a much broader question than just basketball private equity is, is looking at, you know, and is investing all over the place in terms of sport. But what do you think the lessons have been?

Lenz Balan 41:45

Well, I don't know if it's an applicable lesson, right? It just turned out that you know, the, the sort of issues that that firm were issues that I don't think, or I hope most people you know, don't ever have to experience. Right. And so, but you know, I think. I think that the lessons are, that you do, it is really, really patient capital. That it is. It isn't a re a strange way, a social impact asset, even if you don't think of it that way. So it's not easy to just think about it from, I'm gonna turn on this mo monetization spigot. You really have to work at building. Community trust and bringing communities together and making people feel like they're a part of it. So it is, it is as much a social, in my opinion, and that might be my sort of tilt on the world, but it is as much a social impact investment as it is, and a community building in community building exactly. Exercise as it is a, a pure investment. And I think. That it that, that you, the cultural issues around different markets in different locations are real and you have to be cognizant of those. You have to be respectful of those things and you have to work through them over time by building trust. And I think that that is probably those, that execution bit, is harder than I think, than I think a, you know, a McKinsey beautiful presentation backed by a private equity. Might, might, might, might might misunderstand in those bits. But I do think having long-term patient capital and finding the angle that makes your club sustainable is really important. Now I'm saying it as somebody who is. Whose experience is more around almost a startup perspective as opposed to you know, in many ways lines were a startup, are a startup as opposed to sort of a more established, you know, by Chelsea. It's a bit, there's, there's some big differences there, but that's the sort of lens through which I, I would think about. Yeah.

Richard Gillis, Unofficial Partner 43:51

Pa patient capital is a, really, is a phrase that I, I'm fascinated by my reading again, not a financier is Okay. I. They don't need a return quickly or they're gonna find a way to, sell it on private equity. quite often sells things to itself and creates a sort of longer pathway. And we've seen that in Mo gp, we're seeing it, we've CVC and Sports Group at the moment. It's essentially creating new phases of investment.

Lenz Balan 44:20

Yeah.

Richard Gillis, Unofficial Partner 44:21

And then you've got sovereign wealth, which. Again, three years ago, people said there's no one more patient than the Saudis,

Lenz Balan 44:26

Yeah.

Richard Gillis, Unofficial Partner 44:28

and even the patience of the Saudis has been tested by sport. So what do we mean by patient capital? I.

Lenz Balan 44:38

I think what you mean by, well, in a certain way there may be, there are supporting assets out there that are cashflow generative from day one. But you have to think about it from an enterprise value perspective to start, I think. And if you're not thinking about it from an enterprise value perspective, then you're. You're gonna struggle to me in a lot

Richard Gillis, Unofficial Partner 44:56

enterprise value is just a, you know, someone will buy this at a bigger number further down the road. So it's sort of, sort of greater fool, isn't it?

Lenz Balan 45:03

Yeah, yeah, that's right. That's right. So I think you've gotta sort of begin with at least an understanding of that being your thesis. And then you've gotta sprint towards getting to break even as fast as possible because you have to hope that the enterprise value overall is gonna grow. So you're making a broader bet. Basketball, in my opinion, when it comes to basketball in Europe, is basketball incredibly popular? Yes. Does it work for the way in which people consume content? Yes. Is it accessible to audiences? Yes. Are there barriers to entry to play and consume low. Low? Yes. All of those things are, is, are there untapped markets that were, whether it's from the supply side, players, are there great players and coaches? Who can create an amazing product. Absolutely. Is there enough consumer demand for that product? Absolutely. It's just that, and so if you start off with that sort of investment thesis then you just believe that over time the enterprise value of this thing is gonna grow. And candidly, it's sort of a. It's a, it's a closed ecosystem. Only so many people in the world are gonna be able to own a basketball franchise in London or in Europe or in the NBA. And so some of it is that, and then there are other kind of ancillary kind of things I can imagine. There are other sort of positive things that come from being involved in a sports club that you can't get from owning you know, an equipment manufacturing company or a, a chip company and some of that. May in your, to the benefit of your other portfolio companies or bring you new ideas and new concepts that you may not be sort of thinking about immediately. There are sort of people who own sports teams as loss leaders and as marketing tools for their other. Parts of their business. So there's a lot of potential other kind of synergies and upside where somebody might want to, to own, own, own that club for where it makes a lot of sense. And then there's also just a group of people who just love basketball. If you, if you gave me, if I won the lottery and I got, and I was worth, you know,$3 billion, the first thing I would do is buy a basketball team.

Richard Gillis, Unofficial Partner 47:09

Really?

Lenz Balan 47:10

'cause I love the sport. So some of this is that, is that whatever, it's very difficult to recreate the feeling of a locker room. It's very difficult to recreate the feeling of looking at somebody who's in tears because they're team won. It's very difficult to recreate the feeling that a kid who a kid has gotten value or become a better teammate or become a better person or become more productive. As a result of being a part of your club, it's very hard to recreate that feeling in anything else in life. And I think that sort of thing will always lead to investors. Investors have to be passionate about it. So if they, if you're looking at it without passion, I think that's gonna make it quite difficult. The trick is. To have those sort of discipline to check that passion in ways that are so that you don't get financially ruined.

Richard Gillis, Unofficial Partner 48:09

Okay. Well listen, as I said at the beginning, that it's as a sport business story. It's, I think, the story of the year almost. I think, you know, in terms of No, everyone is talking about it. Everyone's got a view on it. It'd be fascinating to follow it. You are right in the middle of it. Good luck. It's a, it a ride. It'll be, it'll be a fantastic experience.

Lenz Balan 48:28

No, I think it, like, I think it is, again, I think we, you know, as alliances, it's just, you know, no matter what happens, we are focused on building a club that means something to people. And I think we've got a lot of smart people who are committed to it and we're working at it every single day. And I think we could do, we could do well and we could do a lot of good at the same time.

Richard Gillis, Unofficial Partner 48:48

Okay. Lens balance. Thank you so much for your time. Really enjoyed that.

Lenz Balan 48:51

Cheers. Thanks.